The Fire Horse represents dynamism, change and unpredictable transformations, which could also characterise this Chinese New Year.

As every year, the same ritual repeats: production stoppages in China and other Asian countries, congested ports, delayed containers and, above all, anxious planners. Even though it ought to be a routine event, it remains a challenge for global supply chains, which often seem more robust on paper but have become more complex, fragile and expensive in reality.

This predictable production interruption once again bluntly demonstrates to companies where true resilience exists and where it merely appears on PowerPoint slides.

When everything stops at once: The risk of synchronous failures

The CNY festival is notable not only for production interruption, but especially for its synchronicity. During this period, entire regions, supply networks and logistics hubs come to a standstill for several weeks. Although many Chinese companies now stagger their shutdowns over time, significant delays in production persist.

Companies with complex supply chains and low stock levels are particularly at risk. The real dangers often lie with indirect suppliers, whose dependencies frequently remain unclear. And without transparency at every stage, companies lack the guidance needed for precise production planning.

Between return and reality: Production losses after New Year

Many companies underestimate the after-effects of the festivities: Despite an official return, production remains below normal levels for weeks.

One of the reasons is the structural loss of labour force. Every year, millions of migrant workers return home for several weeks and some of them do not return. This leads to further bottlenecks, such as uneven machine utilisation, prioritisation of local customers, and spontaneous changes in production plans.

Companies should therefore regard forecasting as more than just a planning issue; especially in China, it thrives on strong relationships. Only those who maintain good relations with Chinese suppliers have the opportunity to influence product priorities.

Dual sourcing does not equate to resilience

Due to past events and changing geopolitical circumstances, companies have realised that they must procure the necessary products or materials for a product from several suppliers, so as to ensure supply even in the event of a disruption to the supply chain.

Many companies therefore now pursue dual or multi-sourcing strategies to increase their security of supply. However, CNY highlights the limitations of these measures when they are not properly taken into account. Often, the secondary suppliers are located in the same region, critical preliminary products are obtained through identical sub-supply chains, or alternative suppliers receive lower priority when production resumes.

Although companies have formally diversified their supply chains, they remain dependent in practice. To maintain productivity during the Chinese New Year festival, it is advisable for companies to relocate critical preliminary products to other suppliers in different regions with alternative sub-suppliers.

The CNY festival can serve as an effective early warning system for the supply chain. Within a matter of weeks, potential vulnerabilities become apparent that would otherwise only emerge over a longer period:

• Where do actual bottlenecks occur?
• Which partners receive preferential access to production after the holidays?
• How quickly do internal decision-making processes progress?
• Where are there gaps in the data?

Today, the supply chain is no longer solely a matter of efficiency but increasingly highlights strategic vulnerabilities. By using scenario planning, various problems can be simulated, allowing bottlenecks to be identified early and solutions to be developed.

2026 is the Year of the Fire Horse, a rare 60-year cycle that stands for energy, speed and change. Companies should therefore act flexibly and proactively to successfully surge ahead of challenges.

Join our webinar to learn how supply chain leaders are orchestrating their way to success.